8 months FIRED, recession, inflation, war and doom!

[Darka]

+1 to Darka - if I knew then what I know now, I'd still have left my job when I did

Crash virgin here too (one year retired, current age 50)... I'm unbothered.

I think unbothered is a good description of it, I'm aware of it all of course but don't feel any need to do anything about it as it's outside my control and I know the best thing to do is to stay invested.

As for regrets, nope, not at all. I remain aware in an abstract sense that if I were still working I'd have had an extra year's worth of surplus income to help cover me against inflation, and that I could have been putting more money into the markets at lower prices over the last few months in pension contributions and outside, but when I have these thoughts it doesn't make me want to change anything today or cringe with regret either. I sure as hell don't wish I'd spent the last year working, or that I was at work today! I'd heard about the One More Year trap when making the original decision, and felt strongly that I had not climbed all the way up to the high-diving board just to chicken out when I got there. No, it's more idle speculation along the same lines as imagining what your life might be like now if you'd stayed in/left a certain relationship, job or your home town, chosen a different course at Uni, whatever your personal big decision points have been.

Completely agree, I have the same thoughts at times but have never regretted retiring and certainly never regretted leaving work, I would never go back as I'm finding this retirement business suits me very well indeed!

The only thing that concerns me slightly is specific to me personally: I'm in the middle of a pensions transfer which can't be done in specie because Standard Life are so very special. So I will shortly be out of the market for what one side says is "normally 2-3 weeks" and the other side says is "up to 30 days". I pressed the buttons on those earlier this week, so who knows whether I'll find myself down, up, or neutral when I come out the other side. But even then, I can't touch my pension for five years so honestly it's just a number. Obviously I'd rather it was a bigger number than a smaller one, but it doesn't seem to be troubling me at all at the moment when I think about it. (And there will never be a time when you could say yep, it's totally safe to do the transfer now because nothing's going to happen in the next month.) Ask me again when I'm seventy and maybe I won't be as carefree about it! But the important thing is making sure I don't mess around when the money becomes available again - I need to sort myself out about what I'm going to invest in and be ready to do it.

I had the same problem, I transferred my last work pension from Legal & General into my SIPP, then the Covid lock downs started and the market went mad, all whilst I was waiting for that transfer to occur. In the end it worked out and I reinvested the money in my SIPP before the market recovered but it was annoying that it took them 3-4 weeks to do the transfer.

In the interests of full disclosure I should add that in the last twelve months I've done bits and pieces which have covered my living expenses (which are only a grand a month or thereabouts), meaning that I have yet to need to access any of my investments. My cash reserve is £50k sitting in Premium Bonds so I'm fine for a good while longer if the market's settling in for a few dead years.

I think if opportunities are there and it's something you are happy doing then there is nothing wrong with that, I was just too jaded by my last couple of years of work that I wanted a complete break from any kind of paid work.

That may change in the future of course if I find something I would enjoy doing but for now I'm happy with the decision I made.

[Darka]

A great post Darka.

As someone who is about 4-5 years out from looking to FIRE all invaluable advice.

Thank you moorfield, time passes so quickly that those 4-5 years will be gone before you know it.

Retiring as soon as one can is definitely the right decision as far as I'm concerned and I can't see that I would ever regret it.
All the planning and saving/investing is 100% worth it.

[Darka]

Talking about the cash float. One of the amusing novelties I now have to think about is the possibility of incurring tax on my cash savings! When we were earning 0.1% on deposits it was not a problem. Now it suddenly is. I'm maxed on Premium Bonds, cash ISA's are still poor rates, so tax efficient options are limited. With Chase offering 1.5% instant access and Fixes approaching 3% I need some new ideas. Or maybe another classic motorcycle

Go for the motorcycle of course, much more rewarding

One thing that I really under appreciated before retiring was that cash is a great help, it might not earn much but it certainly helps you sleep at night through the more troubling market times.

[Eboli]

Fascinating thread this.

I have been thinking about a comment made by Dod:

I would take your time over what to do with your cash reserves. Obviously with inflation the way it currently is holding cash over the long term is not a very good idea because at this rate, a three year reserve could soon become a 2 1/2 year reserve and so on. However interest rates on cash will soon begin to rise nd that will help. Maybe buying some of the wealth preservers might be an idea.

If I understand this correctly, it seems very sensible advice.

For what it's worth I transfer from my other 'basket-like' collection of ITs into Personal Assets (PNL) when my signals suggest it is time to sell a bit and disinvest PNL back into the basket when my signals suggest it is time to buy. This is done purely mechanically as I'm a Doris at heart, based upon collars being broken against a pre-determined asset allocation. In the last 19 years my holding of PNL has varied from being 1.25 x my annual income requirement to a high at the moment of just over 5 x my annual income requirement *. My accessible cash is about 6 months income, which I find more than sufficient.

Not sure whether PNL falls into Dod's 'wealth preservers' but it has certainly performed that role very well for me over the past 18 years.

Eb.

* I find it more difficult to compute my annual income requirement than anything else (perhaps because I tend to have a large discretionary spending habit).

[Hariseldon58]

If you keep a permanent 3 year cash float you are just reducing your returns and still having to sell in a depressed market. It makes more sense to have a reserve that varies in size, from say 1-3 years, which you top-up when the market is favourable.

I have gone with the variable float, ( in US TIPS presently) was as low as 3 years in Summer of 2020 from around 11 years in Jan 2020, back to 11 years a month ago and down to around 9 years after some purchases over the last week or so.

When I went FIRE in November 2007, I had a baptism of fire through to 2010, my cash float was about six months, not ideal… I have taken advantage of the bull market of the last few years to build a float of typically 5/7 years but it varies. Clearly I am market timing to an extent but it feels better to do something and to date it has proved a sound policy.

[moorfield]

A great post Darka.

As someone who is about 4-5 years out from looking to FIRE all invaluable advice.

Thank you moorfield, time passes so quickly that those 4-5 years will be gone before you know it.

Retiring as soon as one can is definitely the right decision as far as I'm concerned and I can't see that I would ever regret it.
All the planning and saving/investing is 100% worth it.

I am also aiming to live off a natural portfolio yield, for some time my planning has been fixed on building an income exceeding the higher rate income tax threshold, I figure that is about as much as one wants to drawdown tax efficiently from a SIPP wrapper. Not far away from that already, so the next target is 4/3* which could be drawn through UFPLS (I am not really thinking at this stage that I will need to take a 25% lump sum, but we'll see). I have begun to rotate into ITs, many of which continued paying out steadily through the Covid pandemic has convinced me to do that. Not a lot in ISAs currently, a growing amount in VCTs.

I'm not sure just stopping working like that in early/mid 50s is right for me. My mind will always need something to keep itself ticking. I will probably first look to downsize my job in a few years time, away from the financial industry. A well known local university always is always posting jobs with generous leave allowances on offer, for example.

One thing that does worry me, which I don't often see discussed here, is how other halves cope with FIRE. Lady M and I have some different interests and indeed different ideas on where to live later in life (I want to leave the UK, she doesn't) so finding a balance that works for us could be tricky I think. But I'm sure we are not alone in trying to juggle our FIRE aspirations, any views there would be interesting.

[tjh290633]

One thing that does worry me, which I don't often see discussed here, is how other halves cope with FIRE. Lady M and I have some different interests and indeed different ideas on where to live later in life (I want to leave the UK, she doesn't) so finding a balance that works for us could be tricky I think. But I'm sure we are not alone in trying to juggle our FIRE aspirations, any views there would be interesting.

You have reminded me of what my wife said, not long after I had retired:

I married you for better or for worse, but not for lunches

Nowadays we tend to go out for lunch rather a lot.

TJH

[kempiejon]

I'm not sure just stopping working like that in early/mid 50s is right for me. My mind will always need something to keep itself ticking. I will probably first look to downsize my job in a few years time, away from the financial industry. A well known local university always is always posting jobs with generous leave allowances on offer, for example.

One thing that does worry me, which I don't often see discussed here, is how other halves cope with FIRE. Lady M and I have some different interests and indeed different ideas on where to live later in life (I want to leave the UK, she doesn't) so finding a balance that works for us could be tricky I think. But I'm sure we are not alone in trying to juggle our FIRE aspirations, any views there would be interesting.

If working keeps your mind active and you enjoy it, FI can be achieved; the RE bit can be delayed as FI would facilitate doing a fulfilling activity that doesn't necessarily offer great/any financial rewards. Like your university inclination.
I was made redundant 15 years back so I tightened my belt. I was already living well within my means so delayed getting back in full-time work. I took a month off then needed to fill my time but didn't really want to get back into the stress of maximising my earning potential. I took an easy part-time evening job. I had my days free so I reacquainted myself with kayaking, volunteered as a national trust grounds-person, helped a friend renovate their home and experimented with meat curing, winemaking and brewing. I did get a bit obsessive with improving my lawns too.
I'm working full time again but with much less responsibility and reduced reward, I'm much more relaxed with improved work life balance. I resented being made redundant but once I was over that I realised I was unhappy in that job, I changed industry and think it improved my lot being dumped.

My SO will probably be working for 10 years post my FIRE. We've had discussion as to where and how we'll live and you're right that balance looks tricky in the planning stages. It's a worry that it'll be harder when we actually start living it. As they work from home I've told myself getting out the house and not loafing about will be an important part of mutual sanity.

[DelianLeague]

Thanks D.L.,

Glad it was helpful, I also wrote it as a reminder to myself about trusting in the plan, and how I felt at regarding the ongoing doom, etc.

I don't know for certain of course, but I am pretty sure that not panicking but instead looking out for good investment opportunities will be the right thing to do.

It might take time for things to recover of course, but I am very confident that it will, and I'm in no rush.

Your second sentence resonates with me. I don't come from a financial back-ground and I grew up in a pre WWW dot world, so It took me a few years to work this out and teach my brain to embrace downturns and recessions as opportunities. I find this way of thinking to be psychologically liberating, in general. Not just in a financial world. It also helped that I have always embraced the Stoic school of thinking.

[Crazbe7]

I have also been FIRED for 8 months.

Delayed for four years by kidney failure (a few years earlier than expected, I had a degenerative kidney disease, but life had been emotionally draining for a few years before, dialysis, kidney transplant (forever thankful), Covid, furlough, redundancy, house move, new job – bored – resigned and into FIRE.

My partner works. My being FIRED and her working is OK. We make it work.

I can’t sit around and do nothing. Really not in my nature. I’ve become a house husband, gardener, decorator, and chef. I'm happy with that. I’m refurbishing the house from top to bottom. I also do some charity work – supporting funding applications, reviewing patient facing hospital documentation etc.

This means we still have stuff to talk, disagree and argue about – the only discernible change is the subject matter now I’m not working!

As an aside we do spend less with no change to our standard of living. Between 20% - 25% less. Will we spend more when my partner retires? We’ll see - 10+ years from that

[Darka]

I have gone with the variable float, ( in US TIPS presently) ...

How did you manage to buy TIPS, I thought they were for US Residents only?

[CliffEdge]

I have gone with the variable float, ( in US TIPS presently) ...

How did you manage to buy TIPS, I thought they were for US Residents only?

I bought some through iShares TP05

[Darka]

Your second sentence resonates with me. I don't come from a financial back-ground and I grew up in a pre WWW dot world, so It took me a few years to work this out and teach my brain to embrace downturns and recessions as opportunities. I find this way of thinking to be psychologically liberating, in general. Not just in a financial world. It also helped that I have always embraced the Stoic school of thinking.

I am an avid fan of Stoicism too, can be really helpful to put things into perspective

[Darka]

I have gone with the variable float, ( in US TIPS presently) ...

How did you manage to buy TIPS, I thought they were for US Residents only?

I bought some through iShares TP05

Interesting, will check them out - thanks!

[Hariseldon58]

I have gone with the variable float, ( in US TIPS presently) ...

How did you manage to buy TIPS, I thought they were for US Residents only?

I bought iShares ITPS ( be careful of your brokers foreign currency charges)

The restriction for US Residents is ibonds I believe,

[AWOL]

I have gone with the variable float, ( in US TIPS presently) ...

How did you manage to buy TIPS, I thought they were for US Residents only?

I bought iShares ITPS ( be careful of your brokers foreign currency charges)

The restriction for US Residents is ibonds I believe,

I have some TP05 (GBP denominated but not hedged) although there is TIP5 if you want dollar denominated and there is a hedged version but I cannot for the life of me remember it's ticker.

[Darka]

Thanks for the TIPS suggestions AWOL and Hariseldon58, will check them out.

regards,
Darka